Investing.com - The pound remained near two-week highs against the U.S. dollar on Wednesday, as demand for sterling strengthened broadly after the Bank of England upgraded its forward guidance on rates and revised up its forecast for economic growth this year.
GBP/USD hit 1.6571 during U.S. morning trade, the pair's highest since January 29; the pair subsequently consolidated at 1.6564, climbing 0.69%.
Cable was likely to find support at 1.6426, the session low and resistance at 1.6605, the high of January 29.
Speaking after the bank published its latest quarterly inflation report, BoE Governor Mark Carney said the U.K. unemployment rate has fallen much faster than the bank anticipated, and will hit the initial 7% threshold “in the spring”.
In the six months since forward guidance was implemented the U.K. unemployment rate has fallen to 7.1% from 7.8%.
The bank outlined new forward guidance, saying that it will not raise rates until the spare capacity in the U.K. economy has been fully absorbed, which it does not see happening until 2015.
The bank said it would consider a broader range of indicators, including the unemployment rate, wages and productivity and business surveys when deciding to raise rates, and added that when rates rise they will do so only gradually.
Sterling was sharply higher against the euro, with EUR/GBP tumbling 1.12% to 0.8197.
The euro came under pressure after European Central Bank Executive Board member Benoit Coeure said in an interview with Reuters that the bank is considering a negative deposit rate very seriously.
He added that the ECB does not see deflation in the euro area, adding that the bank sees low inflation, which should increase slowly back to its 2% target.